Fairness wins in oil/gas rule

Sen. Carlos Uresti, D-San Antonio, offers weekly perspectives from his office in the State Capitol.

By Sen. Carlos Uresti

Score one for bipartisanship, fairness and common sense.

All three of those virtues came together in crafting and passing Senate Bill 1505, which employs a new and better method for the valuation of oil and gas properties in Texas.

People who don’t own oil and gas interests might be tempted to stop reading here, but keep going. It concerns you as well. This new law, just like the problem is solves, will affect homeowners and businesses across the state, particularly in Senate District 19.

What’s it to you? First, a little history is in order.

In 2007 the Legislature passed a law to stabilize the fluctuations in oil and gas values for appraisal purposes. Based on that law, the State Comptroller’s Office adopted a rule requiring that appraisers use something called the “market condition factor” in their calculations.

Under that rule, the comptroller produced a forecast of the estimated price of oil and gas for the coming year, and that estimate was then used by appraisal districts to determine the value of oil and gas properties.

The law was meant to smooth out the ups and downs in appraisal values, and in the process, mineral property became vastly undervalued.

According to the County Judges and Commissioners Association of Texas, the comptroller’s estimate over the subsequent three years averaged about 35 percent below the actual market price â€” a devaluation that cut sharply into counties’ oil and gas tax revenues.

The association estimates that public education lost about $1 billion over the past three years because of this rule, and counties across Senate District 19 faced a dilemma â€” slash vital government services or raise property taxes on homeowners and businesses to make up the lost revenues.

My bill, shepherded through the House by Rep. Tryon Lewis, R-Odessa, removes the comptroller’s revenue estimating methodology and institutes another method based on the U.S. Energy Information Administration’s Annual Energy Outlook.

It will restore certainty to the mineral valuation process and ensure that everyone pays their fair share of the cost of government.

Many people deserve credit for getting this bill through the legislative process, including representatives of the Judges and Commissioners Association, the Texas Association of Counties, the Texas Oil and Gas Association, Chevron, other producers, and counties and appraisal districts.

We were able to reach agreement on this bill because everyone involved acknowledged that fairness and equality in the assessment of taxes is a cornerstone of Democracy. Everyone must share the burden of funding public services.

Two years ago, during the 81st Legislature, I brought these groups together to hammer out a solution to this problem, but it was impossible to work out all the details by the end of the session, despite good-faith negotiating on both sides.

This time, we did it. It wasn’t a Republican solution or a Democratic solution. We all just agreed to do what was best.